December 4, 2017 / 7:33 PM / 13 days ago

Fitch Assigns Ratings to New F&G Life Entities

(The following statement was released by the rating agency) NEW YORK, December 04 (Fitch) Fitch Ratings has assigned a 'BBB' Insurer Financial Strength (IFS) rating to F&G Re Ltd (F&G Re), a Bermuda-domiciled reinsurance entity. The rating assigned to F&G Re is the same as the existing IFS for Fidelity & Guaranty Life Insurance Company (FGLIC) and Fidelity & Guaranty Life Insurance Company of New York (collectively F&G Life). Fitch has also assigned a 'BB+' Issuer Default Rating (IDR) to both FGL Holdings, the Cayman Islands domiciled ultimate parent holding company, and to CF Bermuda Holding Limited, a Bermuda-based intermediate holding company. The Rating Outlook is Stable. A complete list of rating actions follows at the end of this release. KEY RATING DRIVERS The assignment of the 'BBB' IFS to F&G Re Ltd, a new Bermuda-domiciled reinsurance entity, is due to the application of the group rating approach based on Fitch's view that the entity is core to the group. The core status of F&G Re reflects the same branding of the entity as well as the assumption of 60% of FGLIC's core in-force and new annuity business via reinsurance. F&G Re has reasonably consistent capitalization and operating results tied to the overall group. The 'BB+' IDR assigned to both FGL Holdings, the Cayman Islands domiciled ultimate parent holding company, and to CF Bermuda Holding Limited. (CF Bermuda), a new Bermuda domiciled holding company aligns with the 'BB+' IDR currently assigned to Fidelity & Guaranty Life Holdings, Inc. (FGLH). F&G Life expects to hold enough cash between the intermediate and ultimate holding companies to cover at least 2x overall interest expense. In the assignment of IDRs to CF Bermuda and FGL Holdings, Fitch used a ring-fencing assumption based on the view that while a substantial amount of capital and earnings resides in Bermuda, most of the group's business is from the U.S. and the group operations and cash flows would still be potentially influenced by U.S. regulation. Fitch affirmed the IFS and upgraded the IDR and senior debt ratings of FGLH following the company's announcement of the completion of the acquisition by CF Corporation. See press release dated Nov. 30, 2017 for all related rating actions. RATING SENSITIVITIES The following could result in a downgrade of F&G Life's ratings: --F&G Life's consolidated RBC ratio falling below 300% with operating leverage above 20x; --Consolidated financial leverage for F&G Life exceeding 35%; --Fixed charge coverage falling below 5x; --Operating ROE below 5% over four consecutive quarters. F&G Life's ratings could be upgraded if: --The company maintains operating ROEs above 10% on a consistent basis and consolidated RBC above 400%; --Prism capital model score remains on the high end of 'Adequate'; --Fixed charge coverage is at least 8x and financial leverage is below 25%. Fitch has assigned the following ratings: F&G Re Ltd --IFS rating at 'BBB'. FGL Holdings --Long-term IDR 'BB+'. CF Bermuda Holding Limited --Long-term IDR 'BB+'. The Rating Outlook is Stable. Contact: Primary Analyst Nelson Ma, CFA Director +1-212-908-0273 Fitch Ratings, Inc. 33 Whitehall Street New York, NY 10004 Secondary Analyst Douglas L. Meyer, CFA Managing Director +1-312-368-2061 Committee Chairperson Douglas Pawlowski, CFA Senior Director +1-312-368-2054 Media Relations: Sandro Scenga, New York, Tel: +1 212-908-0278, Email: sandro.scenga@fitchratings.com. 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